I think this method of teaching works well if this lines up with how the students are evaluated. The students willingness to accept this form of teaching is entirely reliant on how they feel this will impact their final grade. That's why it's important to align your grading and evaluation style with your teaching style if this is what you expect from students. That way, they'll be more inclined to go with the flow knowing that it won't bite them on the other end when it's time to take a test.
That's an excellent point. I actually stopped grading lab assignments. I found students were more interesting in getting "the answer" than learning the material. This would lead to students making decisions that optimized for"having the answer" but were detrimental to "learning the material".
Once I stopped grading the labs, it freed students to experiment and learn rather than rush and stress about the due date. It didn't really matter if they finished the lab, as long as they learned something along the way.
There was, of course, much more to my classes than the labs. Lectures, group activities, "kahoots", discussions, prelabs, funsheets, etc... Lots of ways to assess a students understanding and help catch the ones that are falling behind.
